Let the Bidding Begin for BlackBerry

BlackBerry isn't the first to forget Wall Street's golden rule of "buy the rumor, sell the news."

Fairfax Financial, BlackBerry's largest shareholder and potential buyer, can't pay as much as other companies for the reasons stated above, but its offer gives us insight. First, we can assume the shares are worth more to someone else and it won't be long before BlackBerry is sold.

The bad news is Fairfax's bid is probably more to spur interest than a genuine offer to buy. The good news it will probably work.

On Wednesday, it was reported that Cerberus Capital Management is considering a bid for BlackBerry. Shareholders won't like a bid by Cerberus any more than Fairfax, so I wouldn't put a lot of hope into it. But you should anticipate greater interest shortly.

Bottom line -- I believe BlackBerry finds a buyer that offers substantially above $8, making current shares under $8 an attractive buy relative to the downside risk.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Robert Weinstein is an active trader focusing on the psychological importance of risk mitigation, emotion and financial behavior of market participants. Robert co-founded the investing blog StockSaints, where he writes a journal about his trading activity and experiences.

In addition to TheStreet, Robert also contributes to Real Money Pro, providing real-time trading ideas for stocks, options and futures.